Report Title:
Income Taxes
Description:
Revises income tax brackets.
THE SENATE |
S.B. NO. |
1740 |
TWENTY-THIRD LEGISLATURE, 2005 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
RELATING TO ADJUSTING THE INCOME TAX BRACKETS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Tax Review Commission, in its most recent report of 2002, stated that the state income tax brackets are so compressed that people on public assistance pay income taxes while the highest rate for married taxpayers filing jointly begins when their taxable income reaches just over $80,000. Today, the median income of a family of four in Hawaii, with both parents working, is approximately $70,000. This means that if this hypothetical middle class family earned only $900 more each month, they would be taxed in the same bracket as a family with an annual income of $900,000.
The legislature finds that the current Hawaii income taxation tables actually imposes a financial penalty on most middle class families in Hawaii. In the hypothetical example of the typical Hawaii household with a $70,000 annual income, and having trouble making ends meet at that, the $80,000 top tax bracket makes matters worse. Furthermore, comparisons with the average income in other states are meaningless when the price in Hawaii of housing, food and clothing, education, transportation, are factored in. In reality, a $70,000 family income in Hawaii buys much less than a $70,000 family income in most other cities in the United States. Hawaii's income tax brackets need to reflect this reality.
The legislature finds that the tax brackets need to be adjusted to bring the tax laws more in line with the economic realities of the high cost of living in Hawaii, and to bring long-term tax relief to low and middle income families.
The purpose of this Act is to provide for equitable income taxation that accounts for the ability to pay taxes by income bracket.
SECTION 2. Section 235-51, Hawaii Revised Statutes, is amended by amending subsections (a), (b), (c), and (d) to read as follows:
"(a) There is hereby imposed on the taxable income of (1) every taxpayer who files a joint return under section 235-93; and (2) every surviving spouse a tax determined in accordance with the following table:
[In the case of any taxable year beginning after December 31, 1998:
If the taxable income is: The tax shall be:
Not over $4,000 1.60% of taxable income
Over $4,000 but $64.00 plus 3.90% of
not over $8,000 excess over $4,000
Over $8,000 but $220.00 plus 6.80% of
not over $16,000 excess over $8,000
Over $16,000 but $764.00 plus 7.20% of
not over $24,000 excess over $16,000
Over $24,000 but $1,340.00 plus 7.50% of
not over $32,000 excess over $24,000
Over $32,000 but $1,940.00 plus 7.80% of
not over $40,000 excess over $32,000
Over $40,000 but $2,564.00 plus 8.20% of
not over $60,000 excess over $40,000
Over $60,000 but $4,204.00 plus 8.50% of
not over $80,000 excess over $60,000
Over $80,000 $5,904.00 plus 8.75% of
excess over $80,000
In the case of any taxable year beginning after December 31, 2000:
If the taxable income is: The tax shall be:
Not over $4,000 1.50% of taxable income
Over $4,000 but $60.00 plus 3.70% of
not over $8,000 excess over $4,000
Over $8,000 but $208.00 plus 6.40% of
not over $16,000 excess over $8,000
Over $16,000 but $720.00 plus 6.90% of
not over $24,000 excess over $16,000
Over $24,000 but $1,272.00 plus 7.30% of
not over $32,000 excess over $24,000
Over $32,000 but $1,856.00 plus 7.60% of
not over $40,000 excess over $32,000
Over $40,000 but $2,464.00 plus 7.90% of
not over $60,000 excess over $40,000
Over $60,000 but $4,044.00 plus 8.20% of
not over $80,000 excess over $60,000
Over $80,000 $5,684.00 plus 8.50% of
excess over $80,000]
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $4,000 1.40% of taxable income
Over $4,000 but $56.00 plus 3.20% of
not over $8,000 excess over $4,000
Over $8,000 but $184.00 plus 5.50% of
not over $16,000 excess over $8,000
Over $16,000 but $624.00 plus 6.40% of
not over $24,000 excess over $16,000
Over $24,000 but $1,136.00 plus 6.80% of
not over $32,000 excess over $24,000
Over $32,000 but $1,680.00 plus 7.20% of
not over $40,000 excess over $32,000
Over $40,000 but $2,256.00 plus 7.60% of
not over $60,000 excess over $40,000
Over $60,000 but $3,776.00 plus 7.90% of
not over $80,000 excess over $60,000
Over $80,000 $5,356.00 plus 8.25% of
excess over $80,000
In the case of any taxable year beginning after December 31, 2005:
If the taxable income is: The tax shall be:
Not over $8,000 $0
Over $8,000 but $56.00 plus 3.20% of
not over $16,000 excess over $8,000
Over $16,000 but $184.00 plus 5.50% of
not over $24,000 excess over $16,000
Over $24,000 but $624.00 plus 6.40% of
not over $32,000 excess over $24,000
Over $32,000 but $1,136.00 plus 6.80% of
not over $40,000 excess over $32,000
Over $40,000 but $1,680.00 plus 7.20% of
not over $60,000 excess over $40,000
Over $60,000 but $2,256.00 plus 7.60% of
not over $80,000 excess over $60,000
Over $80,000 but $3,776.00 plus 7.90% of
not over $100,000 excess over $80,000
Over $100,000 $5,356 plus 8.25% of
excess over $100,000
(b) There is hereby imposed on the taxable income of every head of a household a tax determined in accordance with the following table:
[In the case of any taxable year beginning after December 31, 1998:
If the taxable income is: The tax shall be:
Not over $3,000 1.60% of taxable income
Over $3,000 but $48.00 plus 3.90% of
not over $6,000 excess over $3,000
Over $6,000 but $165.00 plus 6.80% of
not over $12,000 excess over $6,000
Over $12,000 but $573.00 plus 7.20% of
not over $18,000 excess over $12,000
Over $18,000 but $1,005.00 plus 7.50% of
not over $24,000 excess over $18,000
Over $24,000 but $1,455.00 plus 7.80% of
not over $30,000 excess over $24,000
Over $30,000 but $1,923.00 plus 8.20% of
not over $45,000 excess over $30,000
Over $45,000 but $3,153.00 plus 8.50% of
not over $60,000 excess over $45,000
Over $60,000 $4,428.00 plus 8.75% of
excess over $60,000
In the case of any taxable year beginning after December 31, 2000:
If the taxable income is: The tax shall be:
Not over $3,000 1.50% of taxable income
Over $3,000 but $45.00 plus 3.70% of
not over $6,000 excess over $3,000
Over $6,000 but $156.00 plus 6.40% of
not over $12,000 excess over $6,000
Over $12,000 but $540.00 plus 6.90% of
not over $18,000 excess over $12,000
Over $18,000 but $954.00 plus 7.30% of
not over $24,000 excess over $18,000
Over $24,000 but $1,392.00 plus 7.60% of
not over $30,000 excess over $24,000
Over $30,000 but $1,848.00 plus 7.90% of
not over $45,000 excess over $30,000
Over $45,000 but $3,033.00 plus 8.20% of
not over $60,000 excess over $45,000
Over $60,000 $4,263.00 plus 8.50% of
excess over $60,000]
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $3,000 1.40% of taxable income
Over $3,000 but $42.00 plus 3.20% of
not over $6,000 excess over $3,000
Over $6,000 but $138.00 plus 5.50% of
not over $12,000 excess over $6,000
Over $12,000 but $468.00 plus 6.40% of
not over $18,000 excess over $12,000
Over $18,000 but $852.00 plus 6.80% of
not over $24,000 excess over $18,000
Over $24,000 but $1,260.00 plus 7.20% of
not over $30,000 excess over $24,000
Over $30,000 but $1,692.00 plus 7.60% of
not over $45,000 excess over $30,000
Over $45,000 but $2,832.00 plus 7.90% of
not over $60,000 excess over $45,000
Over $60,000 $4,017.00 plus 8.25% of
excess over $60,000
In the case of any taxable year beginning after December 31, 2005:
If the taxable income is: The tax shall be:
Not over $6,000 $0
Over $6,000 but $42.00 plus 3.20% of
not over $12,000 taxable income over
$6,000
Over $12,000 but $138.00 plus 5.50% of
not over $18,000 taxable income over
$12,000
Over $18,000 but $468.00 plus 6.40% of
not over $24,000 taxable income over
$18,000
Over $24,000 but $852.00 plus 6.80% of
not over $30,000 taxable income over
$24,000
Over $30,000 but $1,260.00 plus 7.20% of
not over $45,000 excess over $30,000
Over $45,000 but $1,692.00 plus 7.60% of
not over $60,000 excess over $45,000
Over $60,000 but $2,832.00 plus 7.9% of
not over $80,000 excess over $60,000
Over $80,000 $4,017.00 plus 8.25% of
excess over $80,000
(c) There is hereby imposed on the taxable income of (1) every unmarried individual (other than a surviving spouse, or the head of a household) and (2) on the taxable income of every married individual who does not make a single return jointly with the individual's spouse under section 235-93 a tax determined in accordance with the following table:
[In the case of any taxable year beginning after December 31, 1998:
If the taxable income is: The tax shall be:
Not over $2,000 1.60% of taxable income
Over $2,000 but $32.00 plus 3.90% of
not over $4,000 excess over $2,000
Over $4,000 but $110.00 plus 6.80% of
not over $8,000 excess over $4,000
Over $8,000 but $382.00 plus 7.20% of
not over $12,000 excess over $8,000
Over $12,000 but $670.00 plus 7.50% of
not over $16,000 excess over $12,000
Over $16,000 but $970.00 plus 7.80% of
not over $20,000 excess over $16,000
Over $20,000 but $1,282.00 plus 8.20% of
not over $30,000 excess over $20,000
Over $30,000 but $2,102.00 plus 8.50% of
not over $40,000 excess over $30,000
Over $40,000 $2,952.00 plus 8.75% of
excess over $40,000
In the case of any taxable year beginning after December 31, 2000:
If the taxable income is: The tax shall be:
Not over $2,000 1.50% of taxable income
Over $2,000 but $30.00 plus 3.70% of
not over $4,000 excess over $2,000
Over $4,000 but $104.00 plus 6.40% of
not over $8,000 excess over $4,000
Over $8,000 but $360.00 plus 6.90% of
not over $12,000 excess over $8,000
Over $12,000 but $636.00 plus 7.30% of
not over $16,000 excess over $12,000
Over $16,000 but $928.00 plus 7.60% of
not over $20,000 excess over $16,000
Over $20,000 but $1,232.00 plus 7.90% of
not over $30,000 excess over $20,000
Over $30,000 but $2,022.00 plus 8.20% of
not over $40,000 excess over $30,000
Over $40,000 $2,842.00 plus 8.50% of
excess over $40,000]
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $2,000 1.40% of taxable income
Over $2,000 but $28.00 plus 3.20% of
not over $4,000 excess over $2,000
Over $4,000 but $92.00 plus 5.50% of
not over $8,000 excess over $4,000
Over $8,000 but $312.00 plus 6.40% of
not over $12,000 excess over $8,000
Over $12,000 but $568.00 plus 6.80% of
not over $16,000 excess over $12,000
Over $16,000 but $840.00 plus 7.20% of
not over $20,000 excess over $16,000
Over $20,000 but $1,128.00 plus 7.60% of
not over $30,000 excess over $20,000
Over $30,000 but $1,888.00 plus 7.90% of
not over $40,000 excess over $30,000
Over $40,000 $2,678.00 plus 8.25% of
excess over $40,000"
(d) The tax imposed by section 235-2.45 on estates and trusts shall be determined in accordance with the following table:
[In the case of any taxable year beginning after December 31, 1998:
If the taxable income is: The tax shall be:
Not over $2,000 1.60% of taxable income
Over $2,000 but $32.00 plus 3.90% of
not over $4,000 excess over $2,000
Over $4,000 but $110.00 plus 6.80% of
not over $8,000 excess over $4,000
Over $8,000 but $382.00 plus 7.20% of
not over $12,000 excess over $8,000
Over $12,000 but $670.00 plus 7.50% of
not over $16,000 excess over $12,000
Over $16,000 but $970.00 plus 7.80% of
not over $20,000 excess over $16,000
Over $20,000 but $1,282.00 plus 8.20% of
not over $30,000 excess over $20,000
Over $30,000 but $2,102.00 plus 8.50% of
not over $40,000 excess over $30,000
Over $40,000 $2,952.00 plus 8.75% of
excess over $40,000
In the case of any taxable year beginning after December 31, 2000:
If the taxable income is: The tax shall be:
Not over $2,000 1.50% of taxable income
Over $2,000 but $30.00 plus 3.70% of
not over $4,000 excess over $2,000
Over $4,000 but $104.00 plus 6.40% of
not over $8,000 excess over $4,000
Over $8,000 but $360.00 plus 6.90% of
not over $12,000 excess over $8,000
Over $12,000 but $636.00 plus 7.30% of
not over $16,000 excess over $12,000
Over $16,000 but $928.00 plus 7.60% of
not over $20,000 excess over $16,000
Over $20,000 but $1,232.00 plus 7.90% of
not over $30,000 excess over $20,000
Over $30,000 but $2,022.00 plus 8.20% of
not over $40,000 excess over $30,000
Over $40,000 $2,842.00 plus 8.50% of
excess over $40,000]
In the case of any taxable year beginning after December 31, 2001:
If the taxable income is: The tax shall be:
Not over $2,000 1.40% of taxable income
Over $2,000 but $28.00 plus 3.20% of
not over $4,000 excess over $2,000
Over $4,000 but $92.00 plus 5.50% of
not over $8,000 excess over $4,000
Over $8,000 but $312.00 plus 6.40% of
not over $12,000 excess over $8,000
Over $12,000 but $568.00 plus 6.80% of
not over $16,000 excess over $12,000
Over $16,000 but $840.00 plus 7.20% of
not over $20,000 excess over $16,000
Over $20,000 but $1,128.00 plus 7.60% of
not over $30,000 excess over $20,000
Over $30,000 but $1,888.00 plus 7.90% of
not over $40,000 excess over $30,000
Over $40,000 $2,678.00 plus 8.25% of
excess over $40,000"
SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.
SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2005; provided that if a taxpayer's taxable year includes the effective date of the tax rate changes (unless that date is the first day of the taxable year), then, (1) the tentative taxes shall be computed by applying the rate for the period before the effective date change, and the rate for the period on and after that date, to the taxable income for the entire year; and (2) the tax for the taxable year shall be the sum of that proportion of each
tentative tax which the number of days in each period bears the number of days in the entire taxable year.
INTRODUCED BY: |
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